If you have been denied credit due to your address this article may be of interest to you. There are plenty of reasons under the sun to be denied credit, and most of these reasons make sense most of the time. Yet being denied credit over your physical address seems wrong to many people. If this has happened to you, you may be wondering why, and what if anything you can do about it.
The law says banks and creditors cannot deny you credit based on your neighborhood or street location, yet banks and creditors can deny you credit based on your address in a few situations. When a bank or creditor denies credit due to the neighborhood you live in, this is known as redlining. Redlining is the illegal practice of denying people credit due to their geographical area. Often areas targeted for redlining are minority neighborhoods. Multiple government regulations prohibit redlining.
If you think redlining does not happen in today’s day and age think again. Evans Bank in New York state was sued by the New York attorney general, Eric T. Schneiderman in 2014. The suit alleged that Evans bank denied credit to any African American, regardless of credit. Among the laws broken was the Fair Housing Act, which is a federal law designed to ensure everyone has the right to a mortgage and credit to buy a home, regardless of geographical location or race. A similar lawsuit was brought against Wells Fargo bank, though this one was due to steering African Americans towards predatory loans.
Laws that protect you from redlining:
Equal Credit Opportunity Rights
Equal Credit Opportunity Rights or the ECOA flat out prohibits denying credit to a person or persons due to the basis of race, color, religion, national origin, sex, marital status, age, or because you receive public assistance. Redlining is easy for companies since people in these categories tend to live and congregate in the same neighborhoods.
Community Reinvestment Act
The Community Reinvestment Act mandates that “regulated financial institutions have continuing and affirmative obligations to help meet the credit needs of the local communities in which they are chartered.” This means lenders may not use location data to determine a borrowers risk pool, even if many people in a given geographical locale default on their financial obligations.
So when can a creditor deny credit based on your address? Simply put they can deny credit when there are address anomalies. For example if your credit reports list you living at 112 Mockingbird lane in Buffalo, NY but you apply for credit in Austin, Texas this would be an address anomaly. If you move quite often and apply for credit at each new address this can result in having multiple address locations listed on your credit reports. The creditor must be able to match you to the address you have listed on your application. To avoid this problem you can contact all 3 credit reporting agencies and notify them of any more you make.
You yourself can create these anomalies by accident. Leaving out a street directional for example such as North, South, East or West. If you use different abbreviations that to believe it or not can cause this issue, such as using Avenue instead of Ave. If you accidentally write the wrong house number or use the wrong apartment number such as saying unit B when it is actually unit A. Zip codes need to be accurate as well.
Some addresses are considered high risk, and a creditor may deny you, pending a fraud alert and manual review for these addresses:
Post office boxes
Place of business
APO – Army and Air Force post office
FPO – Fleet post office for Navy and Marines
DPO – Diplomatic post office
Also if the address you listed was used for multiple fraudulent accounts a creditor may deny you credit while residing at that address. Some addresses are known addresses of criminals, while you may not be a criminal one operating or partaking in a lender fraud scheme may have lived at your address in the past.
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